Advantageous timing

DV3 Regent Street Ltd was a company incorporated in the British Virgin Islands which in July 2005 acquired an occupational leasehold interest in a property.

It entered into a contract with the owner of the head leasehold interest in the property L&G in October 2006 to buy the interest for £65.1m.

Stamp duty land tax at 4% would have been due on the transaction had it taken place. Instead a scheme was devised to avoid the tax.

A limited partnership was formed in the British Virgin Islands and a contract of subsale made on 30 November between DV3 Regent Street as vendor and the partnership.

Under the contract the company agreed to sell the head leasehold interest in the property to the partnership for £65.1m.

Crucially the subsale was completed by a separate transfer from the company to the partnership ...